Microsoft, the do-gooder, makes the ethics grade

What a difference a decade makes? Ten years ago, Microsoft was fighting a U.S. district judge's ruling to break the company apart for violating federal antitrust laws. Now, a New York think tank has named it one of the world's 110 most ethical companies.

The Ethisphere Institute released its annual list of corporate good guys based on "real and sustained ethical leadership within their industries." The 2011 list, which makes no attempt to rank the companies, includes some well-known do-gooders such as outdoor apparel maker Patagonia and the Whole Foods Market grocery chain. From techdom, Ethisphere includes Adobe Systems, Salesforce.com, and eBay, among others.

The Ethisphere Institute, which produces an annual list of the world's most ethical companies, has created its "WME Index" that shows the publicly traded companies among 2011 World's Most Ethical Company honorees outperformed the S&P 500 since 2007. (Click image for larger version.)
Ethisphere Institute

As longtime Microsoft watcher Todd Bishop notes, it's an honor that would have been hard to imagine a decade ago. Back then, Microsoft was arguing before a federal appeals court to overturn U.S. District Judge Thomas Penfield Jackson's ruling that the company should be split in two, an argument Microsoft eventually won. Jackson wanted Microsoft cleaved to further prevent it from leveraging its PC operating system hegemony into new markets at the expense of rivals.

Much has changed in the intervening decade. Microsoft is still the dominant purveyor of PC operating systems. But the power derived from that business is much less, as Web services replace packaged software. The modus operandi may have changed at Microsoft over the years. But so too have the circumstances.

To be fair, Microsoft has improved its corporate governance guidelines since its eventual settlement with the Justice Department over the antitrust suit. And as far as do-gooding goes, the software company has long been a model corporate philanthropist.

For its part, Ethisphere says it chose Microsoft and the other companies on the list based on four categories--ethics and compliance; reputation, leadership and innovation; governance; and corporate citizenship and responsibility. The fact that regulators haven't bothered Microsoft for years surely helped, just as it likely hindered Google, which is facing an investigation by the European Union. In fact, Google did not make this year's Ethisphere list even though it had in the past.